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Smaller Indian cities are set to experience significant retail expansion over the next five years, with Tier-II and Tier-III locations leading the charge.
According to a recent report by JLL India, these cities will see the addition of 25 million square feet (msf) of new retail space by 2029, driven by rising consumer demand and the availability of land.
Retail Growth Driven by Demand and Land Availability
The JLL India report attributes the retail expansion to a combination of factors, including increasing consumer demand and previously limited retail development in these regions.
“The expansion is driven by growing consumer demand, availability of land, and a lack of quality retail developments in these markets until a few years ago,” the report noted.
North and South India Leading the Charge
North Indian Tier-II and Tier-III cities such as Ludhiana, Jaipur, and Lucknow are expected to account for 44% of the new retail supply, according to Samantak Das, Chief Economist and Head of Research and REIS, India, JLL.
Southern cities like Coimbatore, Mallapuram, Thrissur, and Trivandrum will contribute another 30% of the upcoming supply. “In western India, major developers are coming up with large-scale, high-quality retail projects in cities such as Goa, Surat, and Ahmedabad,” Das added.
Eastern Region and Strategic Land Acquisitions
The eastern part of the country will see 4.5 msf of new retail space, primarily led by Guwahati. Developers are also making strategic land acquisitions in emerging cities to further bolster retail infrastructure.
Rahul Arora, Head of Retail Services and Office Leasing Advisory, JLL India, emphasized the trend: “In recent years, leading real estate developers have acquired land parcels in Tier-II and Tier-III cities for retail development projects.”
Institutional Investments and Emerging City Opportunities
Around 30% of institutionally held retail assets are located across 12 Tier-II and Tier-III cities as developers and institutional investors capitalize on lower land costs and growing consumer aspirations.
Cities benefiting from this trend include Amritsar, Chandigarh, Udaipur, Mysuru, Mangaluru, Ahmedabad, Surat, Indore, Nagpur, and Bhubaneswar, among others. With rising demand and ample space for growth, smaller cities are positioning themselves as key players in India’s retail market transformation.
